M E M O R A N D U M
|TO:|| File S7-10-00
|FROM: || Marticha Cary
|SUBJECT:|| Proposed Amendments to Part II of Form ADV
|DATE: || July 11, 2001|
On June 29, 2001, Robert Plaze, Jennifer McHugh, and Marticha Cary of the Division of Investment Management met with Duane Thompson of the Financial Planning Association (FPA) to discuss the Commission's April 5, 2000 proposal to amend Part II of Form ADV and related rules. Following is a summary of the comments raised by the FPA.
Proposed Part 2A
- FPA expressed support for: 1) the proposed requirement in Item 4.F. that advisers disclose the wrap fee programs in which they participate and the names of the sponsors of those programs; and 2) the proposed requirement in Item 5.C. that advisers describe third-party fees and expenses.
- FPA discussed the proposed requirement in Item 17 that advisers disclose the standard they use for calculating investment performance. FPA stated that the proposed disclosure may not be useful in comparing investment performance among financial planners and other types of advisers.
Proposed Part 2B
- FPA strongly endorsed the proposed brochure supplement requirement in Part 2B of Form ADV. FPA recommended that the Commission adopt the proposed brochure supplement delivery requirements and not reduce the number of supervised persons for whom a supplement must be prepared or the number of clients to whom a supplement must be delivered.
Proposed Updating Requirement
- FPA objected to the proposed updating requirement (i.e., stickering or revising the brochure and delivering the revised information to clients when information in the brochure becomes materially inaccurate). FPA recommended that the Commission maintain the current brochure delivery requirements, with a requirement that advisers promptly disclose material changes in disciplinary information.